The growing demand for construction materials in South Tarawa, a remote atoll in the South Pacific, provides an example of the environmental and social challenges associated with the use of non-renewable resources in the context of small island countries threatened by coastal erosion and climate change. In many small Pacific island countries, the availability of construction materials is limited, with the majority mined from beaches and coastal reefs in an unsustainable manner. Growing demand for construction aggregates is resulting in more widespread sand mining by communities along vulnerable sections of exposed beach and reefs. This has serious consequences for coastal erosion and impacts on reef ecosystem processes, consequences that cannot be easily managed. Construction materials are also in high demand for infrastructure projects which are financed in part with support from international development agencies and donors. This paper reviews the various challenges and risks that aggregate mining poses to reefs, fish, and the coastal health of South Tarawa and argues that the long term consequences from ad hoc beach/reef mining over large areas are likely to be far greater than the impacts associated with environmentally sustainable, organized extraction. The paper concludes with policy recommendations that are also relevant for neighbouring island countries facing similar challenges.